American interior trim supplier Collins & Aikman is discussing buying part or all of a German acoustic materials maker.
HP-Chemie Pelzer of Witten, Germany, would give Collins & Aikman increased presence in Europe and greater access to DaimlerChrysler on both continents, say sources familiar with the German company.
Pelzer reported about E520 million in global sales last year. About E90 million of that was in the USA.
Pelzer would consider an outside ownership stake to help finance its rapid growth, said David Greeneisen, CEO of North American operations, HP Pelzer Automotive, in Troy, Michigan, USA.
Collins & Aikman has been taking advantage of depressed auto supplier valuations to acquire complementary companies. It is growing in both interior fabrics and acoustics and plastic interior products.
Collins & Aikman CEO Thomas Evans' strategy is to get bigger, but cut overhead and leverage his firm's buying power.
Majority shareholder Heartland Industrial Partners has handled most Collins & Aikman acquisitions. Heartland is a private equity group founded by former US budget director David Stockman. But Evans himself is said to be handling the Pelzer negotiations.
In auto acoustics, Collins & Aikman is No. 1 in North America with a 15 percent share of the segment. But it is No. 4 in Europe with a 9 percent share, according to an internal report.
There are more than a dozen automotive acoustics suppliers in North America. One reason: Margins are healthy because the process is heavily dependent on chemistry, so it's difficult for automakers to determine suppliers' actual costs.
Also, automakers are placing greater emphasis on acoustics in an effort to improve vehicle quality.
Evans is determined to build Collins & Aikman's role in auto interiors, but it's proving expensive.
The company's fourth quarter loss widened after three acquisitions last year.
In December, Collins & Aikman bought Textron's car-trim business for $1.28 billion (E1.47 billion). Earlier last year, it acquired the automotive fabrics business of Joan Fabrics and plastic parts maker Becker Group.
Collins & Aikman had original equipment auto sales of $1.82 billion last year, with North America accounting for $1.53 billion.
Acquiring Pelzer would add 4,000 employees and 34 plants and five technical centers across Europe, Asia, North America and South America.
- Rhoda Miel contributed